Today's Viewpoint: A MarshBerry Publication

BRP ANNOUNCES 1Q2022 EARNINGS

BRP Group (NASDAQ: BRP) reported 1Q22 adjusted Earnings Per Share (EPS) of $0.50 and revenue of $242.8M, compared to 1Q21 EPS of $0.46 and revenue of $152.8M. The company reported strong organic revenue growth of 16%, its highest during a first quarter, and total revenue growth of 59% year-over-year (YoY). All segments of the business (MGA of the Future, Specialty, Middle Market, and Mainstreet) once again saw double-digit organic growth for the second consecutive quarter.

Here are notable takeaways from BRP’s first quarter:

  • Total revenue grew (including acquired revenue) 59% YoY to $242.8M. Adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation & Amortization) margin for 1Q2022 was 30% compared to 1Q2021 of 35%. The decrease in EBITDA margin was primarily driven by the timing of completed partnerships and an acceleration of certain technology investments.
  • “MGA of the Future” organic revenue grew 42% YoY to $24.4M while BRP’s Specialty division recorded revenue of $49.5M and organic growth of 31%.
  • The Middle Market segment recorded total 1Q2022 revenue of $171M and an organic growth rate of 13%. BRP noted this business unit is exposed to higher growth industries (real-estate, technology, healthcare, construction) and geographies and while some of those sectors could feel some weakness due to the current climate of the economy. Overall, Management feels well-positioned.
  • Chief Executive Officer Trevor Baldwin, on the completion of their acquisition of Westwood Insurance Agency: “Beyond our continued outsized organic growth, we were excited to complete the acquisition of Westwood Insurance Agency post-quarter end. Westwood represents our largest partnership to date and will considerably accelerate many of our growth initiatives in the substantial homeowner’s insurance market. We remain well positioned in this ever-changing economic and geopolitical environment to further deliver sustainable growth, increased profitability, and stakeholder value as we currently see our business performance accelerating into 2Q2022.” With the addition of Westwood, pro forma revenue based on the last twelve months ended March 31, 2022, is approximately $835M.
  • Expectations for 2Q2022 are for all business units to produce organic growth in the high teens despite ongoing economic uncertainty. BRP still expects a 50- to 100- basis point increase in EBITDA margin compared to 2021’s 20%. BRP expects 2Q2022 revenue to be $220M and adjusted EBITDA to be 100- to 150- basis points higher than the 17% in 2Q2021.
  • BRP noted that the merger & acquisition (M&A) deal count was the lowest quarterly amount since 1Q2016 but attributed this decline to the large number of deals that took place in 2021 along with the current climate of the economic and geopolitical environments. BRP forecasts 2022 to be on the lower end of expected M&A activity for the company. The company will be thoughtful on how it deploys its capital and will continue to strategically target high performing targets.

Overall, BRP is expecting accelerated growth for the remainder of 2022, attributable to both ongoing momentum and the completion of the Westwood Insurance Agency acquisition. The company spent heavily on technology and talent to start the year and expects these investments to help propel organic growth into the high teens.

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This earnings summary has been prepared by Marsh, Berry & Co., LLC. and is not intended to provide investment recommendations on any company. It is not a research report, as such term is defined by applicable laws and regulations, and it does not contain sufficient information upon which to make an investment decision. It is not to be construed as an offer to buy or sell or a solicitation of an offer to buy or sell any securities, financial instruments or to participate in any particular trading strategy. These materials are based solely on information contained in publicly available documents and Marsh, Berry & Co., LLC has not independently attempted to investigate or to verify such information.

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